Eurozone Economy – Is it really an end to the dominance of the US Treasury’s
Economists believe Europe’s influence is diluted by its over-representation on the IMF board. Because of overrepresentation eurozone economy, national interests often take precedence over common goals. About 40% of all the IMF’s executive directors are from the euro zone. Instead there should be a pooling of IMF quotas by all eurozone countries. The euro zone would then have one constituency on the fund’s executive board.
The position can then be by a candidate nominated by the eurozone group of finance ministers. This would force Europe’s fiscal and monetary authorities to co-operate in tailoring their input into IMF decisions. The eurozone member would wield more power, because he would represent an even larger quota than that of America. This would in fact bring an end to the dominance of the US Treasury’s in the board.
If, for example, any euro country needed emergency support, the other eurozone countries could simply agree to lend it through their IMF quotas. Given that the eurozone countries’ quotas total about €60bn the troubled country could then easily obtain a large IMF loan, – and also the loans can easily reach multiples of the quota. Creditor countries within the eurozone would also gain, because they would not need to extend vast sums in guarantees to European Financial Stability Facility, without quite compromising their interests within the EFSF’s existing structure, the EFSF representing their collective interests within the IMF.